Newbie here - updated to include SOA

kevstanley

This is the first time I've visited this particular forum (if anything, I've avoided it), but I have finally decided that I must tackle my debt. It's not the worst in the world - £5000 on a single credit card - but the worry about it, and the shame of having accrued it has been eating away at me for a while now, and I know I need to do something about it. No-one else - including my partner - has any idea about it at all. We live pretty frugally, and our household income is not much to write home about, but if I can bring myself to talk to my partner, I am sure I can start to repay more than the bare minimum each month.

I just wanted to say how incredibly helpful this visit has been for me - I've read stories that make me feel like I'm not alone, found and begun to use resources which will help me to get out of this mess, and strengthened my resolve and my knowledge that I can deal with this.

So - huge thanks to all who post here. It's a huge relief (and motivator) to read your stories and advice.

tbourner

Welcome to DFW!!

What is the interest rate on the card? Can you get a 0% card and transfer it to that?
Do you have a sound budget that shows how much you have to pay off of the card each month? A spending diary and SOA will help with this.

SuziQ1962

Hi Kevstanley- as the above poster says get it onto a 0% interest card and stick it in an envelope or even better (someone on here did this) put it in a plastic box full of water in the freezer so you are not tempted to use it again-or chop it up! I have a £100 standing order that comes out of my account monthly to pay mine off and I can change the amount if I need to.Hope that helps a bit :-D

kevstanley

Thanks tbourner and SuziQ1962

Out of fear of getting out of control, I stopped using the card a few months ago - daft, isn't it, that I could get that far along, but still not face up to the debt itself? In fact until this morning I didn't even know how much was on the card. I made myself open my last statement (yes, I was in denial enough to stockpile unopened statements).

I am complete novice about credit cards, actually, and must read up about transferring to a lower interest rate one. Seriously, haven't a clue. A couple of years ago I applied for and got a Sainsburys card for this purpose, but couldn't work out the transfer process. I feel such an idiot confessing that, but I am determined to be honest about all this.

Have just checked the statement again, and on it are stated simple and effective rates of interest. I assume the effective one is the one I need to know - and that is 16.9%

Is it really straightforward to transfer credit card debt? I feel as though I should understand all this, but I just don't.

tbourner

Once you've found a card with a nice long 0% rate window (there are a few pages on this site) you just apply for it and somewhere in the process, whether it be filling in the form or after you've received your card and you phone them, you just give them the details of the current card and how much you want to transfer (usually up to 95% of the available balance on the new card) and they do it for you. They charge a fee of somewhere around 3%, but if you have say a 12month 0% interest you'll more than make that back assuming you're paying enough off each month.

kaz0705

Hi Kev,

Well done for finding this forum! It's literally changed my life- hope it does the same for you!

The 0% thing isn't so easy, I'm afraid. Lot's of the more 'seasoned' posters were able to take advantage but I haven't been able to get one due to, I'd assume, my credit rating and total borrow.

However, in the olden days I did take advantage of some 0% (before my LBM) and found that I'd maybe get £1k limit when I had £3k to transfer and then, before you know it, you have two cards (or in my case four!!) to pay off.

That's not to write off the idea, particularly if you've just got one card; more of a warning.

The best thing to do is post a statement of affairs. You will not believe how many ways there are of cutting bills and things! With this, everyone can have a look and advise you where you might be able to make savings....

I would also advise checking out the snowball calculator on whatsthecost.com- it shows how quickly you'll pay off your debt making minimum payments (truly depressing) or with some 'over payments'. It's a massive motivator! (you can also get the SOA on that site).

Don't worry at all about being clueless, that's what the site's here for! I worked in a bank when I left school and still had no idea really!

As a quick warning as well, check you haven't had a letter telling you about a rate increase. You have 30 days (in 2010) to call up and say 'no thanks' and, if they try it this year, you have 60days to say 'no thanks'. Essentially, as long as you don't use the card, you'll be able to stay at the existing interest rate.... On that note, it's worth calling Sainsbury's and seeing if they'll drop the rate for you- if you don't ask you don't get! There's a bit under Martin's cards section about asking for a lower rate.

Good luck and welcome to the family!

Kaz

Katie-Kat-Kins

Welcome and well done for getting this far!

Post an SoA as suggested and we'll all have a look at it. I'd talk to you OH about it too, if you are both working towards the same goal it will be much easier.

dollybeads

Well done to you for finding the forum, please do not despair, no question on these forums is too simple to ask. You will be inundated with really helpful advice and support in getting this sorted. As an earlier poster has said, it has changed my life in a very short time, with simple, practical steps that have saved me £100s a month, all to go towards paying my debts off.

If you need any help in getting going with the statement of affairs try this post, its a very helpful step by step guide.

Good luck to you and keep posting, it will be good to hear how you progress.

Dolly x

https://forums.moneysavingexpert.com/discussion/2976812

kevstanley

Thanks so much for all the replies. I've set aside some proper, uninterrupted time tomorrow to go through a SOA (had to look that one up!), because that seems to be the first, most important thing to do. I THINK we do quite well with expenditure, but without writing it all down, it's all just so much guesswork. Am also building up the courage to talk to OH about it, and will be going through (hopefully should be able to find them) last few statements. Now I know how much I owe, I'm not nearly so scared of opening the previous statements. I feel as though it took that one step of deciding to face it to get things in motion.

I'm really touched by all the help and concern here.

kevstanley

OK, I sat down this morning and tried to work out an SOA. I've been honest about expenditure even where I'm a bit embarrassed by it.


Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 0
Partners monthly income after tax....... 1336
Benefits................................ 1010
Other income............................ 0
Total monthly income.................... 2346
Monthly Expense Details
Mortgage................................ 308.7
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 117
Electricity............................. 71
Gas..................................... 100
Oil..................................... 0
Water rates............................. 36
Telephone (land line)................... 20
Mobile phone............................ 15
TV Licence.............................. 6.25
Satellite/Cable TV...................... 24.5
Internet Services....................... 37
Groceries etc. ......................... 300
Clothing................................ 60
Petrol/diesel........................... 60
Road tax................................ 17
Car Insurance........................... 81
Car maintenance (including MOT)......... 30
Car parking............................. 0
Other travel............................ 200
Childcare/nursery....................... 0
Other child related expenses............ 66
Medical (prescriptions, dentist etc).... 20
Pet insurance/vet bills................. 10
Buildings insurance..................... 37
Contents insurance...................... included above
Life assurance ......................... 0
Other insurance......................... 10
Presents (birthday, christmas etc)...... 40
Haircuts................................ 15
Entertainment........................... 50
Holiday................................. 20
Emergency fund.......................... 50
partner's pension....................... 75
disability related expenses............. 100
Total monthly expenses.................. 1976.45

Assets
Cash.................................... 0
House value (Gross)..................... 270000
Shares and bonds........................ 0
Car(s).................................. 5000
Other assets............................ 0
Total Assets............................ 275000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 60000....(308.7)....4.24
Total secured & HP debts...... 60000.....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
John Lewis ....................5000......150.......16.9
Total unsecured debts..........5000......150.......-

Monthly Budget Summary
Total monthly income.................... 2,346
Expenses (including HP & secured debts). 1,976.45
Available for debt repayments........... 369.55
Monthly UNsecured debt repayments....... 150
Amount left after debt repayments....... 219.55
Personal Balance Sheet Summary
Total assets (things you own)........... 275,000
Total HP & Secured debt................. -60,000
Total Unsecured debt.................... -5,000
Net Assets.............................. 210,000
Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using IE browser.


I can immediately see areas which need addressing - those fuel costs are insane - we don't live in a mansion - and I wonder why they are so high. So need to contact npower about that. Also virgin media re: TV/broadband/phone to see how that can be reduced.

Some things are quite difficult to quantify. We have a high level of benefits, because my OH has a significant disability. So I've put disability related expenses in, but I'm not sure that would be a comprehensive figure. For example, the last time he had to replace his laptop, it was £1500 - same specs as my average one (he wasn't just being greedy!), but with the adaptations he needed, that was the price. So that sort of thing is very hard to calculate. When we replace household items, we need to make sure he can use them, which often means that we need to pay a bit more. I hope all that makes sense.

Nevertheless, I've tried to calculate as accurately as I can. And I can see that there should be money left at the end of the month, which, if I were to switch to a 0% card and repay more, would help enormously with the debt repayment. The thing is, although there is clearly money left over, it isn't actually there at the end of the month - it must just get frittered away. So I am planning to begin making a note of everything we spend, so that I know where it's all going, and then hopefully can cut back accordingly.

I'm also currently looking for part time work (not employed at the moment), so that might help somewhat.

Looking at my figures, some do seem extravagant (and there was I saying I thought we were frugal!). Having said that, we've cut our grocery bills from something like £450 to £300 in the last year, so we are getting there, albeit slowly.

Trying not to beat myself up over being such a flake about all this for so long, and it's really scary putting the finances "out there" - please be gentle!

Katie-Kat-Kins

Well done! Your SoA looks more comprehensive and honest than many first attempts!

If you don't genuinely have that £200 left at the end of the month then a spending diary is the way to keep track of your finances and find out where it is going (probably on the occasional take-away/coffee etc plus slightly exceeding budget in lots of areas.

You've identified the biggies, the gas and electric bill is insane, and your phone/tv/internet/mobile combined cost is massive too - that needs to be addressed there are some really good inclusive deals out there.

I'll go through the SoA properly and post some comments.